Swiss Franc Hits 2-Month High
The Swiss franc strengthened to 0.81 per USD, its highest level since early September, as initial US midterm results pointing to a Democratic takeover of both chambers of Congress weakened the dollar and boosted demand for safe-haven currencies. Adding to support, Swiss inflation climbed to a nearly three-year high of 1.5% in October, driven by higher imported energy costs. While inflation remains within the SNB’s 0%-2% target range, its acceleration has raised expectations of an earlier rate hike, with markets anticipating a move in early 2027. Meanwhile, increased safe-haven demand could encourage investors to unwind carry trades, supporting further franc gains. Previously, the wide interest rate differential with the US had weighed on the currency, as Switzerland's 0% borrowing costs made the franc an attractive funding currency for investments in higher-yielding assets.
The Swiss franc strengthened to 0.81 per USD, its highest level since early September, as initial US midterm results pointing to a Democratic takeover of both chambers of Congress weakened the dollar and boosted demand for safe-haven currencies. Adding to support, Swiss inflation climbed to a nearly three-year high of 1.5% in October, driven by higher imported energy costs. While inflation remains within the SNB’s 0%-2% target range, its acceleration has raised expectations of an earlier rate hike, with markets anticipating a move in early 2027. Meanwhile, increased safe-haven demand could encourage investors to unwind carry trades, supporting further franc gains.
Previously, the wide interest rate differential with the US had weighed on the currency, as Switzerland's 0% borrowing costs made the franc an attractive funding currency for investments in higher-yielding assets.